KOTA BHARU, Malaysia, Oct. 18 - Sahimah sells Islamic books, tapes
and head scarves from her sidewalk kiosk here. But pride of place is
reserved for a new arrival: T-shirts emblazoned with Osama bin
Laden's face and the phrase "Man of the World," available in adult and
children's sizes.

"We've already sold 40 of them because Osama is such a celebrity,"
said Sahimah, who gave only her first name.

Mr. bin Laden is an unlikely hero in Malaysia, a tidy, generally tranquil
country of 22 million that neighbors Indonesia and the Philippines.
While two-thirds of its people are Muslim, its government is secular,
and it has managed to escape much of the Islamic militancy that
simmers in many Asian countries.

Even in Kota Bharu, an Islamic stronghold in far northern Malaysia
where the sale of alcohol is largely banned, Chinese shops are
exempt. Mosques coexist with Buddhist temples, Ramadan with
Chinese New Year.

In the wake of the Sept. 11 terrorist attacks and the American retaliation
in Afghanistan, however, Malaysia is losing its moderate sensibility.
Islamic leaders are calling for a holy war against the United States,
while Prime Minister Mahathir Mohamad insists that Malaysia faces a
threat from homegrown Muslim militants.

"The atmosphere has changed completely since Sept. 11," said Leong
Su Siang, the head of the Chinese Chamber of Commerce. "There is a
lot of talk about an Islamic state. The Chinese are scared of a Taliban
regime."

That prospect is highly improbable. But the war in Afghanistan has
opened new fissures in the old debate over Malaysia's Islamic identity.
Dr. Mahathir, a moderate Muslim, has tried to strike a balance -
supporting the United States-led campaign on terrorism while
condemning the American military strikes.

Critics say he has also used the fear of Islamic terrorism as a cudgel to
go after the opposition Islamic Party of Malaysia, which has grown in
popularity in recent elections and poses a threat to his 20-year rule.

"He is trying to tarnish our party by linking us to terrorism," said
Nasharudin Mat Isa, the party's secretary general. "By creating fear,
he keeps the support of non-Muslims."

Dr. Mahathir is not the only Asian leader to use the campaign against
terrorism to further a political agenda.

In the Philippines, President Gloria Macapagal Arroyo has offered
troops to the United States in the hope that Washington will help her
crush a stubborn Muslim insurgency on the southern island of
Mindanao.

In Indonesia, rivals of President Megawati Sukarnoputri, including Vice
President Hamzah Has, who leads the country's largest Islamic party,
are seeking to profit from her support of the United States. Radical
Islamic groups have condemned Mrs. Megawati and threatened
Americans in that country.

Here in Malaysia, the contest over Islamic identity has been fought
through elections rather than violence. So the newly strident tone has
been deeply alarming, particularly to the ethnic Chinese, who comprise
30 percent of the population.

"We're concerned that there is a transformation in the secular
foundation of the country," said Lim Kit Siang, the head of the
Democratic Action Party, an opposition party that represents Chinese.

Some of the most superheated words are coming from Kota Bharu, the
capital of the northern state of Kelantan. Since 1990, it has been
governed by the Islamic party and its 77- year-old spiritual leader, Nik
Aziz Nik Mat. These days, he is putting the United States on notice.

"If Malaysians want to burn down the U.S. Embassy, I would advise
them not to," Mr. Nik Aziz said in an interview. "At the same time, the
U.S. should stop its terrorism in Afghanistan. If the U.S. doesn't stop and
Malaysians want to retaliate, it would be unwise for me to stop them."

Last Friday, an angry crowd of 2,000, gathered by the Islamic party,
protested in front of the American Embassy in Kuala Lumpur, scattering
only after the police doused the protesters using water cannon.

Dr. Mahathir has accused the Islamic party of having ties to radical
groups here. On Oct. 10, he ordered the detention, without trial, of six
men suspected of belonging to a shadowy militia determined to
overthrow the government and replace it with a fundamentalist regime.

The six men joined 10 others detained in August, including Nik Adli, a
son of Mr. Nik Aziz. The government accused the son, a teacher
educated in Pakistan, of being the ringleader of the militia, known as
the Malaysian Militant Group, which officials say received military
training in Afghanistan.

"We admit there are terrorists in the country," Dr. Mahathir said in an
interview with a local newspaper, The New Sunday Times. "The only
difference is that these terrorists are directing their attacks at us, and
we can take care of them." Mr. Nik Aziz said his son was an unlikely
militant: a quiet young man who just married and was "busy with
gardening." He likened the charges to the Bush administration's
accusations against Mr. bin Laden. "There's no proof," he said.

While Mr. Nik Aziz said that he is determined to spread Islamic rule,
including Shariah law, to all of Malaysia, he said it would be the same
tolerant strain of Islam that has suffused Malay society for centuries.

"We have never used aggression toward non-Muslims," he said,
adding, "I don't know anything about the Taliban."

In the streets and open-air markets of Kota Bharu, Malaysia's
traditional tolerance is now tinged with a newly awakened sense of
Islamic solidarity. Virtually everybody condemned the strikes on
Afghanistan as an assault on all Muslims. But few were ready to
endorse the terrorism practiced by Mr. bin Laden.